In a small northern Michigan town, a historic opera house has been transformed into a lounge with plump leather chairs where people can sit and smoke weed together.
Kalkushka, based in downtown Kalkaska, is one of two licensed cannabis consumption lounges in Michigan. The other, Hot Box Social in Hazel Park, is open for private events like birthday parties or industry meetings.
“In a lot of ways, we’re creating something that no one’s ever really seen or heard of before,” said Kalkushka general manager Chris Atteberry.
Only 10 states, including Michigan, have greenlit marijuana lounges and cafes in recent years. It seems like a promising concept – a place for people to use cannabis legally in public – but strict Michigan laws have made it tricky for lounges to gain traction.
The biggest restriction: consumption lounges can’t sell marijuana on site.
“I think that’s the most important one because imagine you’re a bar, but you can’t sell alcohol,” said Scott Roberts, managing partner of Detroit cannabis law firm Scott Roberts Law.
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Hot Box Social, the first licensed social cannabis consumption business in Michigan, opened as a private venue in March 2022. Customers who rent the space in metro Detroit can bring their own cannabis or order products from local retailers.
“We created a safe space for people to not just consume in their home, but to meet in that social environment,” said Hot Box Social general manager Samantha Baker.
Big windows, plush couches, leafy wallpaper and green tiling make Hot Box Social feel like a coffee shop. A specialized ventilation system, similar to a cigar bar, whisks away smoke. And state regulations don’t allow alcohol on site.
Baker says this eliminates a pressure for customers to drink.
“I’ve heard the same feedback from others that it’s nice to have a space, whether you’re there for an event or just hanging out with friends, where you don’t necessarily have to have alcohol present,” she said.
At Kalkushka, the business model is subscription-based.
Customers can buy a yearly, monthly or day pass to consume cannabis in the venue where there are board games, live music, trivia nights, comedy shows, coffee and snacks. A dab table sits in the lounge that was made from a tree planted in 1886 and later struck by lightning.
Since opening in June last year, Atteberry says the lounge aims to be “a piece of the community” that people visit multiple times a week.
“Cannabis users are amazing people who are amazing parts of the community,” he said. “(They) really enjoy having a place to go to use together, be together and laugh in a non-threatening environment.”
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Both owned by Carbidex, a Lansing-based holding company involved in the cannabis industry, Kalkushka is located next door to The Botanical Co. – one of six dispensaries in the small town of Kalkaska. Lounge customers can purchase products at the dispensary or bring in anything they want to use, except for tobacco or alcohol.
“There’s no selling of THC at all at the lounge, but there’s lots of sharing of THC here at the lounge,” Atteberry said.
Since Michigan voted to legalize recreational marijuana five years ago, at least 21 municipalities have OK’d cannabis consumption lounges. Michigan has only received four license applications in the past three years. And even though other lounges have been proposed in cities like Ann Arbor, Kalamazoo and Muskegon, only Kalkushka and Hot Box Social have opened.
Roberts described it as a three-step process for lounges to receive state approval.
The first step is submitting background information to be pre-qualified for owning a cannabis business in Michigan. Then businesses must get local approval before going back to the state to secure a consumption license.
Roberts believes licensing hurdles could make it difficult for lounges to make profits.
“I think the law and the restrictions make it just not economically viable as a standalone business,” he said. “The way they can make money is charging entrance fees. But because they have all these ongoing compliance costs, it’s a struggle for them to break even.”
(Can’t see the chart? Click here.)
Marijuana has exploded into a $2 billion industry in Michigan – doubling in two years – even as customers paid a record low of nearly $60 an ounce last year, straining a saturated market. Michigan also added more than 100 retail shops last year putting the total at 609 in December, state data shows.
But Roberts says the market for marijuana lounges remains “unproven.”
“It’s hard to convince someone to pay $20 to smoke in a lounge when they’re like ‘I’ll just go in my basement. It’s free,’” he said.
Other states with marijuana lounges have also imposed strict restrictions.
In California, a recently-introduced bill would allow cannabis cafes to sell food and coffee. The city of Las Vegas approved rules earlier this month that require lounges to be 1,000 feet away apart. Customers in Illinois and Pennsylvania need to bring their own supplies.
Colorado, the first state to legalize marijuana, also allows bring-your-own-cannabis lounges. But a new state law cleared a path for the first marijuana bar, where customers can buy weed onsite and consume it, to open last year.
“It took us years to get the social clubs. The licensing was very contentious, and the restrictions were very significant,” said Sean McAllister, a Colorado lawyer who has worked with cannabis, hemp and psychedelic medicine regulations.
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Marijuana tasting rooms also provide a way for Coloradans to use cannabis publicly. Whereas in Michigan, outside of marijuana lounges, public consumption is only allowed at licensed events like Muskegon’s CannaBash festival or Ypsilanti’s CannaJam.
“I think there’s something special about a place where cannabis is used instead of being forced to be behind a bush or in the shadows of society,” Atteberry said.
As Michigan’s marijuana lounges near their first year in business, Atteberry believes more could follow. And Baker thinks different consumption lounge business models could start popping up across the state after Hot Box Social and Kalkushka trailblazed last year.
“At the end of the day, cannabis is here in Michigan. It’s becoming one of the biggest states in the country affiliated with cannabis, and that’s not a bad thing,” Atteberry said. “It’s a good thing, if we embrace it in the right way.”
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